US Investor Sustainable Finance takeaways: closing the reality vs. perception gap

Our main predictions are:

• Positive momentum continues in the US as evidenced by NatWest meetings focused on Sustainable Finance with global investors managing ~$21 trillion in assets: 
  • Sustainability remains a core investment lens, with ESG integration driven by client demand and seen as key to long-term risk and return. 
  • Labelled products continue to attract strong interest, especially green, social, and blue bonds, with investors still accepting modest greeniums.
  • Transition finance is gaining pace, supported by policy incentives and growing focus on renewables, LNG, and nuclear in the evolving energy mix. 
  • Resilience and adaptation are rising priorities, with investors increasingly addressing physical climate risks and favouring resilience framing over traditional ESG language. 
  • Climate data and tools are becoming essential, as firms invest in internal platforms for stress testing, carbon accounting, and physical risk analysis. 

RISE Awards celebrate the future

• NatWest Group was awarded “Best Bank for Sustainable Finance” at the RISE Awards, acknowledging its strong commitment to funding sustainable initiatives and supporting the transition to a low-carbon economy. 
• NatWest was nominated for helping businesses understand and reduce their environmental impact and costs through innovative tools such as Carbon Planner, Sustainability Solutions and excelling our ambitious GBP 100bn climate financing targets early.
• NatWest expressed gratitude for the recognition, reaffirming its dedication to helping businesses and communities transition to a more sustainable future, and celebrating the collective efforts of all nominees and winners.

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NatWest publishes 2026 Sustainable Finance Year Ahead 

• Climate resilience goes mainstream. With physical risks intensifying and economic losses growing, we expect a rise in corporate adaptation plans and investment into resilience technologies. The market for climate adaptation solutions could exceed $1 trillion by 2030, with utilities and real estate leading the charge.   
• Sustainable bond issuance remains robust. Despite macro headwinds, we forecast $1.1 trillion in GSS/S-labelled issuance. Green bonds will dominate, but sustainability bonds show fastest growth – especially in APAC.   
• Transition finance is set to expand, supported by clearer guidelines and product innovation like SLLBs.   
• EU Green Bonds gain momentum. Corporates are embracing the EU Green Bond Standard, driven by investor appetite and reputational pressure. Utilities lead, but real estate and transport are poised to follow.   

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ICMA announced Climate Transition Bond Guidelines 

• In a significant step toward accelerating climate-aligned finance, ICMA has released its Climate Transition Bond Guidelines (CTBG), introducing a new label and framework aimed at supporting issuers -especially those in high-emitting sectors- on their journey toward net zero 
• Key Features of the CTBG include: 

1. Introduction of the Climate Transition Bond Label (CTB); 
2. Expanded scope of eligible projects; 
3. Issuer level disclosure requirements; 
4. Sustainability-Linked Bonds for high-emitting sectors. 

• This comes following the new transition fund category introduced under SFDR 2.0, looking to help corporate issuers develop robust, taxonomy-aligned climate transition plans and science-based targets. Read more on NatWest’s ‘need to knows’ for corporate issuers on SFDR 2.0.

Read NatWest Insights article 

EU Parliament voted to simplify sustainability reporting and due diligence laws 

• European Parliament voted on 13th November to simplify sustainability reporting and due diligence rules, limiting obligations to very large companies (382 in favour, 249 against, 13 abstentions). 
• Sustainability reporting will apply only to firms with over 1,750 employees and €450M turnover, with reduced qualitative details and voluntary sector-specific reporting; smaller companies are shielded from extra data requests by larger partners. 
• Due diligence duties would cover corporations with over 5,000 employees and €1.5B turnover, using a risk-based approach to monitor and identify companies’ negative impact on people and planet.

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UK to regulate ESG ratings providers from 2028 

• UK Parliament passed legislation to regulate ESG ratings providers, bringing them under FCA supervision. 
• Providers offering ESG ratings in the UK, domestic or foreign, must obtain FCA authorisation and comply with rules on transparency, governance, systems, and conflicts of interest. 
• Law follows IOSCO’s 2021 recommendations and UK consultations (2023–2024), aiming to improve transparency and reliability in ESG ratings. 
• FCA will publish proposed rules by year-end; regulation takes effect June 2028, with guidance to help firms assess applicability. This movement is in line with a similar initiative published by the EU commission in 2024.

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Elia Transmission Belgium issued the first EU GB in Belgium

• Elia Transmission Belgium (ETB), part of the Elia Group, issued their inaugural EU Green Bond (EuGB), where NatWest acted as Active Bookrunner.
• Elia opted for an intraday execution to take advantage of a strong market backdrop and limited primary supply - despite this being their first EuGB. Ultimately, this enabled Elia to price with a -5bps new issue premium. 
• The issuance includes an EU GB Factsheet and pre-issuance review dated September 2025 and 100% of proceeds will be allocated to electricity transmission and distribution.
• This transaction follows ETB’s 2024 green bond issuance. In total, ETB has issued two prior green bonds, with the latest green finance report confirming that proceeds were allocated to renewable energy projects.

TDC Net back in the market with their sixth Sustainability-Linked Bond 

• TDC Net, providing digital infrastructure and telecommunication solutions across Denmark, announced EUR 500m 8-Year Sustainability-Linked Bond, with NatWest acting as Passive Bookrunner. 
• With two KPIs focusing across Scope 1, 2 emissions (KPI 1) and Scope 3 emissions (KPI 2), the sustainability-linked step-up margin for the KPI 1 at 9.375bps per annum and KPI 2 12.5bps per annum. 
• The issuer has been active in the SLB market since 2022, with five SLB issuances prior, totalling EUR 2.5bn in outstanding volume. 
• This issuance is a signifier of ongoing supply in the Sustainability-Linked Bond market, despite another regular – Enel - stepping back from using this structure going forward.

First hybrid in EUgB format by Iberdrola 

• Iberdrola, global Spanish power utility, came to market with EUR 1bn in the hybrid structure with the EU Green Bond label. 
• A pioneer in the green bond space, Iberdrola became the first repeat corporate issuer of EuGB and the transaction marked the first EuGB hybrid issuance. 
• Notably, nearly 90% of the capex plan forecasted by Iberdrola for the period 2023-2025 will be directed to activities that are aligned with the EU Taxonomy.

Norges Bank Investment Management (NBIM) announces plans to ‘strengthen’ climate commitments 

• Norway‘s sovereign wealth fund, has published its 2030 climate action plan, outlining how it plans to further strengthen its management of climate-related risks and opportunities.
• The 2030 plan, seeks to strengthen the link between investment objectives and climate goals, ensure ‘credible’ climate targets and transition plans, and promote global standards for disclosure. The new action plan increases its focus on nature, adaptation and physical climate risk, and utilise AI to improve risk management and reporting. 
• “Climate risk is financial risk” commented Nicolai Tangen, CEO of NBIM. “Our long-term returns depend on how the global economy manages physical climate risk and the energy transition.”

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Transition bonds need to be separate from green bonds, says BNP PAM 

• BNP Paribas advocates clearer guidance and standardised labelling for transition bonds, emphasising they should not be mixed with green bonds to maintain credibility. 
• Transition bonds aim to finance hard-to-abate sectors moving toward decarbonisation, requiring principles-based frameworks to avoid greenwashing and encourage innovation. 
• Investors call for alignment with EU taxonomy and SFDR while maintaining flexibility for transition strategies, highlighting the need for market coherence and comparability.

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European Union endorses Leaders Declaration on Carbon Markets forged with Brazil at COP30 in Belém 

• Brazil has founded a new coalition which aims to harmonise the rules for Emission Trading Schemes globally.
• The Leaders Declaration boosts the recognition of carbon pricing and market mechanisms as key tools to advance climate action globally and implement national climate plans. The coalition aims to implement ambition, effectiveness, and fairness in compliance carbon markets. 
• Current signatories are Brazil, China, the European Union, United Kingdom, Canada, Chile, Germany, Mexico, Armenia, Zambia, France and Rwanda. The coalition is open to new signatories. 
• Additional note: NatWest Attended the Business and Finance Forum in São Paolo in the lead up to COP30. It was noted that there were lots of discussions surrounding funding for adaptation finance. Speakers and leaders mentioned how adaptation funding for nature-based solutions often does not work without carbon and nature markets revenue.

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European Council agrees its position on a 90% emissions reduction for its 2040 climate target 

• The European Council reached an agreement on amending the European climate law to introduce a binding target for 2040 of a 90% reduction in net greenhouse gas emissions, compared to 1990 levels. 
• There is the possibility to use high-quality international carbon credits to make up to 5% contribution, in a way which is both ambitious and cost effective, from 2036 onwards including a pilot period 2031-2035. 
• There is clarification on the role for domestic permanent carbon removals under the EU ETS to compensate for residual hard-to-abate emissions alongside the introduction of a provision to postpone the entry into application of the EU ETS for buildings and road transport (ETS2) by one year, from 2027 to 2028.

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Regular articles from us on market-moving themes, and updates on what we are doing to further our ESG commitment. 

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Sustainability Solutions platform

We’ve launched a new climate platform to help cut costs and support businesses in their transition to become more sustainable. The main features of the platform are a focus on lower emission vehicles and solar potential. The tool has a quick calculator function where businesses can gather quick costings and estimated savings and also generate in-depth solar reports to find tailored recommendations of local suppliers. 

Explore the tool here. 

For the full monthly newsletter login to Market Insights. Or, for Corporates looking to discuss any of the above further, please reach out to our authors:

• Caroline Haas, Head of Sustainable Finance Advisory 
• Dr Arthur Krebbers, Managing Director, Sustainable Finance Advisory 
• Rui Zu, Sustainable Finance Advisory
• Thomas Gidman, Sustainable Finance Advisory
• Daniel Bressler, Sustainable Finance Advisory
• Helen Ferguson, Sustainable Finance Advisory
• Niceasia Mc Perry, Sustainable Finance Advisory
• Isabella Crack, Sustainable Finance Advisory
• Zeyno Yurddas, Sustainable Finance Advisory

Disclaimer

Finance is subject to status. Security may be required. Product fees may apply.

Sustainable financing and facilitation represents only a relatively small proportion of NatWest Group’s overall financing and facilitation activities. Details of our financing and facilitation activities and associated emissions can be found in the NatWest Group – 2024 Sustainability Report (sections ‘Estimates of financed emissions’ (p.41) and ‘Estimates of facilitated emissions from bond underwriting and syndicated lending’ (p.45))